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R&D Tax Credit Services

What is the Research and Development (R&D) Tax Credit?

Available in some form since 1954, the Research and Development (or R&D) Tax Credit remains an important incentive when it comes to American business innovation. The R&D Tax Credit is a dollar-for-dollar reduction in a business’s tax liability as it relates to specific domestic expenses. Created to encourage technological invention in the US, a business can claim this credit if they commit company funds to the advancement of American modernization.

Activities that qualify for the R&D Tax Credit:

You may qualify for the R&D Tax Credit if your company did any of the following, including but not limited to:

  • computer

    Improving existing technology, software, prototypes, or other processes

  • psychology

    Developing qualified intellectual property

  • engineering

    Hiring employees, such as scientists or engineers, who engage in qualifying research and activities

  • model_training

    Devoting company time to creating new or innovative products

  • payments

    Paying salaries to employees who engage in qualifying innovative activities…

  • And more!

Am I eligible for the R&D Tax Credit?

If your business is engaged in research and development with the intention of advancing American technology, then you will be eligible! Under I.R.C. §174, as long as you are making a good faith effort to improve or advance industry and not simply engaged in the activity for the tax credit, it applies. Just be prepared to show your work and your commitment to R&D!

More questions about whether or not you qualify for an R&D credit? Contact the experienced former IRS Auditors at Pinnacle Minds to find out more!

Is the R&D Tax Credit Taxable Income?

If you receive the R&D Tax Credit, it reduces your federal taxable income. This means you’ll receive a dollar-for-dollar tax credit and still be able to deduct your business expenses for the same research and development, saving you more money.

Checking stocks

What are the most common industries that benefit from the R&D Tax Credit?

Many different types of industries engage in research and development that could qualify for this valuable tax credit. These are just some of them:

  • directions_car

    Automobile Production

  • rocket

    Aerospace Engineering

  • sports_bar

    Breweries

  • restaurant

    Food and Drink Sciences

  • psychiatry

    Life Sciences

  • factory

    Manufacturing

  • settings

    Software Development

  • wine_bar

    Winery and Vineyard Sciences

  • And more! Contact our knowledgeable Pinnacle Minds team to see if your company is one of the many that could qualify for the R&D Tax Credit.

Frequently Asked Questions

  • What documents do I need to claim the R&D Tax Credit?

    If you’re claiming a federal R&D credit on a new return, you need to have records that are in usable form and that detail all of the expenses you’re claiming to be eligible. If you’re amending an old return, however, you will need to have specific records. This can include a list of each business component, as well as the research activity to which the R&D credit claim relates. If you have more questions about your documentation, be sure to contact Pinnacle Minds for assistance!

  • Do I have to be a start-up or a small business to qualify for the R&D credit?

    You don’t! But you will need:

    • Gross receipts less than $5 million in the taxable credit year;
    • No gross receipts for any taxable year preceding the 5-taxable year period, ending with the taxable credit year; and,
    • R&D credits that can be claimed.
  • Are there activities that aren’t covered under the R&D statue?

    There are! They include:

    • Reverse engineering
    • Duplication or adaptation of existing business components
    • Software developed solely for internal company use (though there are some exceptions to this rule)
    • Research related to the arts, humanities, or social sciences

     

    And more… If you have a question about whether or not your business qualifies for the R&D credit, let Pinnacle Minds go through the process for you before you file. Call one of our knowledgeable former IRS Auditors today!

  • Can I amend my prior returns to go back and claim the R&D credit?

    You can! Just make sure the tax year is covered by the R&D statute.